Norwegian ingenuity in the arctic

The Arctic does not surrender its treasures lightly. Willem Barents, the Dutch explorer for whom the Barents Sea is named, was the first of many to learn this in his doomed pursuit of a northeast passage to Asia in 1597. But for those who prevail in this harsh environment, the rewards can be considerable. Nowhere is this more evident than in Snøhvit, the massive gas field 140 km northwest of Hammerfest, on Norway’s north coast.

Published: 23.01.2007

Through a combination of ingenuity, careful engineering and steadfast attention to protecting safety and the environment, Norway has engineered a truly world-leading design that will open Snøhvit’s gas reserves for shipping towards the end of 2007. Snøhvit is just the beginning, however. Major oil and gas finds in other areas of the Norwegian and Russian high Arctic, estimated to represent fully 25 percent of the world’s remaining petroleum reserves, mean that Norwegian ingenuity and technology will be put to good use in the years to come.

While the Russian petroleum heavyweight Gazprom decided in October 2006 that it would develop its Barents Sea giant, the Shtokman field, without international partners, the Russian market remains full of promise, observers say. And as the region is opened increasingly for development, it makes environmental and economic sense to set the same strict standards across nations – to the benefit of all involved.

“The Barents Sea could be a melting pot for innovation and cooperation across nations, trades and industries,” Helge Lund, Statoil’s chief executive, said to a gathering of representatives from Norway’s three northernmost counties in the spring of 2006. “While the Norwegian petroleum industry is on the way north, the Russians are moving westward from their core area in Siberia…. From an industrial point of view we must regard the Barents Sea as one sea. Only then can we achieve collaboration, synergies and common solutions across boundaries.”

A Fully Subsea Solution Snøhvit is a story of firsts: the first major petroleum development in the Barents Sea; the world’s most northerly and Europe’s first-ever plant for cooling and liquefying natural gas; the world’s most distant remotely operated field; and the world’s longest multiphase pipeline. When the NOK 58.3 billion development comes online in 2007, Snøhvit should produce 5.7 billion cubic metres of gas per year, with potential sales of NOK 400 billion for the life of the project, said Sverre Kojedal, Statoil’s information chief for the Snøhvit project. Roughly 2.4 billion cubic metres of this gas will be shipped to the United States, while the remaining gas will be shipped to France and Spain.

Many of these developments have required new technologies, or major modifications of existing technologies, to meet difficult Arctic conditions while protecting the environment. For example, Statoil and the German engineering firm Linde developed a new, highly energy-efficient technology for handling Snøhvit’s gas. Snøhvit’s design, with its subsea installation, minimizes the environmental impacts of gas production, and does not interfere with fishing trawlers plying Barents Sea waters, Kojedal said. Another key component is the extraction and return of CO2 from Snøhvit’s gas to the reservoir, to keep the CO2 from contributing to greenhouse gases. “This has never been done before,” he said.

There’s good reason for Norway’s fastidious attention to environmental protection: The Barents Sea is highly productive, with about 150 species of fish, among which are the largest stocks of some of the planet’s most economically important species, such as cod, herring, capelin and blue whiting. Nearly 25 million seabirds nest on the Barents Sea coast in some of the world’s largest seabird colonies. More than a dozen whale and dolphin species and other marine mammals call the chilly waters of the Barents Sea home.

Care for the environment extended to the drilling of Snøhvit’s production wells. The Polar Pioneer drilling rig was modified before drilling began in December 2004, and new equipment was designed to eliminate the discharge of harmful chemicals to the sea. For example, pipe threads used in drilling were altered to eliminate the need for threading compound – which meant there was no discharge of heavy metals and petroleum products to seawater. The drilling crew had two days of special training, and other processes were modified to eliminate environmental impacts. As a result, there were no harmful discharges during the 616 days that the Polar Pioneer operated.

Knut Aaneland, director of Oil and Gas Suppliers for the Federation of Norwegian Industries, a trade group, said that offshore suppliers are serious about their role in protecting safety and the environment. “To set the world’s strictest requirements to protect Norway’s northern areas, suppliers will develop the world’s best environment and safety products, and will continue to expand our leading position,” he said.

Sharing Norwegian Expertise The spillover from Snøhvit to the Norwegian oil and gas industry was significant. For example, a decision by FMC Kongsberg Subsea, Vetco and Aker Kværner to invest in subsea technology in the 1990s has led to their leadership role in this specialized area, Aaneland said. “Today, three of the four world-leading companies in this field are Norwegian,” he said.

Other companies are pushing the technology envelope, too. Leif Höegh and Co., which delivered two of the four specialized LNG tankers that will freight gas from Snøhvit to southern markets, is working on a new onboard tanker design that will convert LNG back to natural gas, and Aker Yards Marine is developing a LNG containment system for very large LNG carriers.

Snøhvit subcontractors have spanned the range from contractors like Torgy Mek Industri of Tønsberg, which makes pipe clamps and pipe supports, to full-service construction, assembly and maintenance companies like Fabricom of Stavanger, Reinertsen of Trondheim and Veidekke of Oslo, which transformed the island of Melkøya into an LNG processing and terminal complex. In all, just over 60 percent of all Snøhvit contracts were awarded to Norwegian firms – evidence of the country’s expertise. Petro Arctic, an organization representing fully 350 subcontractors who are interested in working with Snøhvit and other oil and gas projects in the Barents Sea region, has also worked to help suppliers win contracts.

Petro Arctic’s subcontractors have reason for continued optimism. High oil prices have led Statoil to reconsider extracting an estimated 50 million barrels of oil found in the Snøhvit field. While this isn’t considered a significantly large find, it could be developed with finds at the nearby Goliat field, also in the Norwegian area of the Barents Sea. Statoil has also found gas in the Tornerose field, 60 kilometres west of Snøhvit.

Goliat, about 85 km northwest of Hammerfest and 50 km southeast of Snøhvit, is believed to contain about 200 million barrels of oil. Melkøya, the island off Hammerfest that has been transformed into the LNG processing plant and terminal for Snøhvit, may be joined to the coast to handle oil processing, Statoil has said. The Italian company Eni is currently exploring the Goliat field; Statoil and DNO are also partners in the project. To the east, Norsk Hydro has been given permission to explore a prospect called Nucula, while to the southwest, ElectroMagnetic GeoServices is mapping hydrocarbon resources in the Troms II field, west of Tromsø.

Shtokman & Beyond Norwegian expertise has a ready market in Russian Arctic oil and gas deposits, which are believed to hold 60 percent of the undeveloped petroleum finds outside of the Middle East. Now that disappointment has faded over Gazprom’s decision to develop the Shtokman field alone, Norwegian offshore suppliers and contractors are looking ahead.

“The Russians need equipment, they need systems, and they need offshore knowledge,” Aaneland said. “I think that Norwegian companies are quite well positioned, so that when the Russians start up, we are ready.”

The North and Barents Seas have schooled Norwegians well: companies like Framo Engineering of Bergen offer multiphase booster pumps that can be essential in handling gas, while Nexans Norway of Oslo has developed subsea umbilical systems for great depths and lengths, now in use at Snøhvit. Already, roughly 25 percent of all technology-related contracts for the offshore Prirazlomnoye oil field, 60 km south of Novaya Zemla, have been awarded to Norwegian firms, including a contract for two icebreakers from HavYard Leirvik. Aker Kvaerner Maritime Pusnes of Arendal, which makes deck machinery and mooring systems, will also supply the project, as well as Gann Mekanisk, Hydromarine, Siemens Oil and Gas, Noras and Glamox.

Håkon Skretting, the Russian regional director for Norwegian Oil and Gas Partners (INTSOK), said Russians recognize Norway’s extensive experience in difficult offshore conditions. The Russian market “has huge potential,” he said, particularly in the next decade. A number of INTSOK’s 160 companies are opening Russian branches, Skretting said, including Scandpower Petroleum Technology of Oslo, which provides software and consulting services in multiphase flow and reservoir simulation. Reinertsen has also established a yard in Murmansk that both serves the Russian market and supplies products for use in Norway. “That’s good for the Russians; it’s cooperation that goes both ways,” Aaneland said. “They know our products and they know what we have done.”

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